4) Exercise 17-16 (Static) Determine and record pension expense and gains and losses; funding and retiree benefits [LO17-6, 17-7]Actuary and trustee reports indicate the following changes in the PBO and plan assets of Douglas-Roberts Industries during 2021: Prior service cost at Jan. 1, 2021, from plan amendment at the beginning of 2018 (amortization: $4 million per year)$28millionNet loss—AOCI at Jan. 1, 2021 (previous losses exceeded previous gains)$80millionAverage remaining service life of the active employee group 10yearsActuary's discount rate 7% ($ in millions) Plan PBOAssets Beginning of 2021$600 Beginning of 2021 $400 Service cost 80 Return on plan assets, 8% (10% expected) 32 Interest cost, 7% 42 Loss (gain) on PBO (14) Cash contributions 90 Less: Retiree benefits (38) Less: Retiree benefits (38) End of 2021$670 End of 2021 $484 Required:1-a. Determine Douglas-Roberts's pension expense for 2021.1-b, 2. to 4. Prepare the appropriate journal entries to record the pension expense, to record any 2021 gains and losses, to record the cash contribution to plan assets and to record retiree benefits.

Pension expense (PE) refers to the expense amount that the business charges in relation to the…

Answered: Actuary and trustee reports indicate…

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter19: Accounting For Post Retirement Benefits

Section: Chapter Questions

Problem 4E

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4) Exercise 17-16 (Static) Determine and record pension expense and gains and losses; funding and retiree benefits [LO17-6, 17-7]

Actuary and trustee reports indicate the following changes in the PBO and plan assets of Douglas-Roberts Industries during 2021:


Prior service cost at Jan. 1, 2021, from plan amendment at the beginning of 2018 (amortization: $4 million per year)	$	28	million
Net loss—AOCI at Jan. 1, 2021 (previous losses exceeded previous gains)	$	80	million
Average remaining service life of the active employee group		10	years
Actuary's discount rate		7	%

($ in millions)		Plan
PBO	Assets
Beginning of 2021	$	600		Beginning of 2021	$	400
Service cost		80		Return on plan assets,
				8% (10% expected)		32
Interest cost, 7%		42
Loss (gain) on PBO		(14	)	Cash contributions		90
Less: Retiree benefits		(38	)	Less: Retiree benefits		(38	)
End of 2021	$	670		End of 2021	$	484

Required:
1-a. Determine Douglas-Roberts's pension expense for 2021.
1-b, 2. to 4. Prepare the appropriate journal entries to record the pension expense, to record any 2021 gains and losses, to record the cash contribution to plan assets and to record retiree benefits.

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